GM announces closure of its Lordstown assembly plant

ABJ/Ohio.com staff and wires

Monday

Nov 26, 2018 at 11:08 AMNov 26, 2018 at 7:02 PM

The large General Motors Lordstown assembly plant in Trumbull County, a mainstay of the Northeast Ohio economy for more than 50 years, will close before next spring with the loss of about 1,600 hourly and salaried jobs.

The Mahoning Valley plant has been the production site of the the small car Chevrolet Cruze since 2010.

The Youngstown Vindicator reported that Lordstown workers were called into a meeting Monday morning at which they learned that Cruze production would end as of March 1.

Sales of the economical Cruze peaked in 2014 and have fallen steadily since, largely a victim of lower gasoline prices and a shift in consumer preference away from cars to crossovers, SUVs and light trucks.

In General Motors parlance, the Lordstown plant and other facilities are being “unallocated” and the company will lay off about 14,700 blue-and-white collar employees nationwide.

United Auto Workers Local 1112 president David Green, speaking to reporters at the UAW hall in Warren, just south of the Lordstown plant, said "as we move forward, I am remaining hopeful" that GM will keep the plant open and its workers employed. UAW Local 1112 represents 1,200 GM workers plus another 300 workers for other companies.

Lordstown Mayor Arno Hill said he believes as a community “we still have a chance," and implored GM to “tell us what you need to be successful here. We’ll jump through hoops to make it happen.”

Changing priorities

The closing of Lordstown and as many as four other plants is part of a large restructuring that will in part focus GM more on autonomous and electric vehicles, the company said.

Most of the GM factories up for possible closure build cars slated to stop production in the near future.

Among the possibilities are the Detroit/Hamtramck assembly plant, which makes the Buick LaCrosse, Chevrolet Volt, Cadillac CT6 and Chevrolet Impala, all slow-selling cars. LaCrosse and Volt production will end March 1, while CT6 and Impala production would stop June 1.

Work on six-speed transmissions made at the Warren, Mich., transmission plant would stop Aug. 1, while the Baltimore transmission plant would stop production April 1, GM said.

Meanwhile, GM's plant in Oshawa, Ontario, will stop making the Impala, Cadillac XTS and 2018 full-size pickups in the fourth quarter of next year.

Still, the factories could get different vehicles to build, The Associated Press said. They will be part of contract with the United Auto Workers union next year.

Shares of General Motors closed up $1.72, or 4.8 percent, to $37.65 on Monday. Shares have traded as high as $45.52 over the last 52 weeks.

Cost-saving decision

GM said its moves will save $6 billion in cash by the end of next year, including $4.5 billion in recurring annual cost reductions and a $1.5 billion reduction in capital spending.

Those cuts are in addition to $6.5 billion that the company has announced by the end of this year.

GM doesn't foresee an economic downturn and is making the cuts "to get in front of it while the company is strong and while the economy is strong," CEO Mary Barra said.

Barra said GM is still hiring people with expertise in software and electric and autonomous vehicles, and many of those who will lose their jobs are now working on conventional cars with internal combustion engines.

Ohio’s two U.S. Senators, Democrat Sherrod Brown and Republican Rob Portman, both said they had met with GM’s CEO in recent months but she would not commit to ensuring the future of the Lordstown plant.

Lordstown’s viability has been hurt in large part because the plant lacks flexibility; it makes only one product, the compact Cruze.

According to GM figures, Cruze sales in the U.S. peaked at 273,060 in 2014 and have been in a steady decline ever since.

Through September, the automaker said it sold 109,662 Cruzes and if sales trends hold, the company likely won’t hit 130,000 in sales for the full year. September sales totaled 10,657, down from 15,268 in September 2017.

According to the Akron Automobile Dealers Association, Cruze sales in its multicounty Northeast Ohio territory since Jan. 1 totaled 791, down 329, or 29.4 percent, from the same period in 2017. Summit County Cruze sales since Jan. 1 totaled 276, down 158, or 36.4 percent, from the same 10-month period in 2017.

High-profile plant

The Lordstown complex, which GM's website lists as employing about 1,435 hourly workers and 183 salaried, opened in 1966. It occupies 6.2 million square feet on more than 900 acres of land. GM said the plant since opening has produced 16.3 million vehicles through 2017, and it generated $250 million in wages and $48 million in withholding taxes in 2017.

GM also said the plant is the site of the company’s largest solar array in the western hemisphere and can produce as much as 2.2 megawatts of electricity at peak times.

The plant has been a frequent stop for presidential campaigns and other political visits over the years.

Among the more recent events: The late Arizona Sen. John McCain spoke at the Lordstown plant in June 2008 as part of his presidential campaign; Hillary Clinton spoke at the plant in February 2008 during her initial presidential campaign; President Barack Obama gave a speech about the economy inside the factory in September 2009; and Vice President Joe Biden visited in 2012.

The Mahoning Valley sweated out whether Lordstown would get to make another car once production ended there in the late 2000s for the Chevrolet Cobalt, the predecessor of the Cruze. The state of Ohio gave $84.1 million in tax breaks to General Motors to woo the Cruze and keep Lordstown working. GM, which was coming off of Chapter 11 bankruptcy in 2009 and received a federal government bailout, finally announced that it would invest $351 million in the Lordstown plant to build the Cruze.

General Motors earlier this year ended a second shift at Lordstown, putting about 1,500 people out of jobs. The company previously ended a third shift that left about 1,000 people without work.